Prior to 10 July 1967, the New Zealand pound, using the £sd system, was the currency of New Zealand. Coins of the pound tend to follow the size, weight, and composition of their British counterparts. The main coins in usage were the halfpenny (½d), penny (1d), threepence (3d), sixpence (6d), shilling (1s), florin (2s), and halfcrown (2s 6d).

Decimalisation of the New Zealand currency occurred on 10 July 1967, when the New Zealand pound was replaced by the New Zealand dollar at a rate of one pound to two dollars (10 shillings to a dollar). On the same day, new decimal coins were introduced to replace the existing pound coins. The first coins of the New Zealand dollar were 1c, 2c, 5c, 10c, 20c, and 50c. The 1c, 2c, and 50c coins were new sizes, with the 1c and 2c minted in bronze, and 50c in cupronickel. The new 5c, 10c, and 20c were the same size, weight, and value as the former sixpence, shilling, and florin coins. Indeed, until 1970, the 10 cents coin bore the additional legend "One Shilling".

The obverse designs of all the coins featured Arnold Machin's portrait of Elizabeth II, with the legend ELIZABETH II NEW ZEALAND [date]. The initial designs for the reverse sides of the coins introduced in 1967 were rejected by the Royal Mint. Several more designs were produced, followed by a vigorous public debate. James Berry's designs were eventually accepted for most of the coins,[1] although he was asked to rework his design for the 5c coin and Francis Shurrock's design for the 10c coin.[2]

In 1986, the portrait of Elizabeth II on New Zealand coins was changed to Raphael Maklouf's new portrait of the Queen.

Towards the end of the 1980s, the 1c and 2c were becoming of little value, and it was decided to withdraw these coins from circulation. The last coins of these denominations were minted for circulation in 1987, with collector coins being made for 1988. The coins were slowly withdrawn from circulation, before finally being demonetised (no longer legal tender) on 1 May 1990.

After the withdrawal of these coins, cash transactions were normally rounded to the nearest 5 cents, a process known as Swedish rounding. Some larger retailers (notably one supermarket chain), in the interests of public relations, elected to round the total price down (so that $4.99 became $4.95 instead of $5.00). Alternatively, many retailers rounded all their prices to the nearest 5 cents to avoid the issue entirely—so a New Zealand shopper often encountered products for sale at prices like $4.95.

On 11 February 1991, $1 and $2 coins were introduced to replace the $1 and $2 notes in circulation. These coins were minted in aluminium bronze, and were the first New Zealand coins to be minted to metric specifications.

At the same time, because the new $1 coin depicted a kiwi, the 20c coin reverse design was changed. The new 20c coins depicted a Māori carving of Pukaki, a chief of the Ngati Whakaue iwi. Coins with kiwi design, however, outnumbered coins with the new design until they were replaced with the new 20c coins, all depicting the later design, in 2006.

In 1999, Ian Rank-Broadley's portrait of the Queen was introduced and the legend rearranged to read NEW ZEALAND ELIZABETH II [date].

On 11 November 2004, the Reserve Bank announced that it proposed to take the 5c coin out of circulation, and to make the existing 50, 20 and 10c coins smaller and use plated steel to make them lighter. The reasons given were:

The 5c coin is now worth a third of what a cent was worth back in 1967, when New Zealand decimalised its currency.

Surveys had found that 50, 20 and 10c coins were too large and could not be easily carried in large quantities. The original 50c coin, with a diameter of 3.2 centimetres, was one of the largest coins in circulation worldwide, and the original 20c coin, New Zealand's second biggest coin at the time at 2.8 cm, is bigger than any current circulating coin (the biggest coin in circulation is the $2 coin at 2.6 cm).

The size of the 10c piece was too close to that of the dollar - in fact, it was so close that it was possible to put two 10c pieces in a parking meter together and receive $1 worth of parking time, or jam the meter and make parking free anyway. The advent of pay & display metering in larger cities, whereby one is required to use another meter if the first one is jammed, has largely stopped this practice.

The prices of copper and nickel used to mint the old coins were high and rising steeply, and the metal content of some coins exceeded their face value.

After a three-month public submission period that ended on 4 February 2005, the Reserve Bank announced on 31 March it would go ahead with the proposed changes. The changeover period started on 31 July 2006, with the old coins usable up until 31 October 2006. The older 50, 20, 10 and 5c pieces are no longer legal tender, but are still redeemable at the Reserve Bank.

In August 2005, the Royal Canadian Mint, which has minted Canadian coins in plated steel in the past, was selected by the Reserve Bank to make the new coins. The new coins have a unique electromagnetic signature which enables modern vending machines to determine coin counterfeiting and foreign coins [1], and it was estimated the changeover would remove nearly $5 million of foreign coinage from circulation.

The change to smaller coins is also advantageous to Australia, as the outgoing 5, 10, and 20c coins were of the same size and weight as Australian coins of these denominations, and were easily confused by shopkeepers and retailers, as well as being usable in Australian vending machines and parking meters.

There is one commemorative coin currently in circulation as legal tender. It was released on the 23 March 2015 and has monetary value of 50c. It features the standard back design but on the front it features two soldiers, one New Zealander and one Australian surrounded by two ferns and traditional maori designs with the words "The Spirit of Anzac We Will Remember Them" and "1915-2015" in reference to the 100th anniversary of the Battle of Gallipoli in 1915. It is also the only coin as of yet to feature colour, a black background around the soldiers. The coins are limited to 1,000,000 and were minted by Canadian Mint

Numerous mule coins have been accidentally minted, at least two of which have ended up in circulation.

The first instance occurred in 1967, when the two cent coin was accidentally minted with the obverse of the Bahamian five cent coin.

Subsequent examples include a New Zealand 1981 5c obverse muled with a Canadian 10c reverse and a 1985 50c obverse muled with a Canadian $1, both of which are extremely rare.

Another example occurred in 2000, with ten known instances of the commemorative $5 coin found in uncirculated sets. This coin had the Pied Cormorant on the Reverse side, as did the other $5 coins of the year, however the obverse was from Solomon Islands.

Though not technically a mule, a mix-up of a different kind arose in 1975 when some NZ 20c coins were accidentally struck on scalloped blanks intended for the Hong Kong $2 coin. The obverse and reverse dies are correct for the NZ coins; only the blank is the incorrect shape.

An earlier reported instance of a mule involving the small-sized 20c coin introduced in 2006 with a Canadian 5c most probably relates to reports in the press of the discovery of Canadian 5c coins in mint rolls of NZ 20c coins, mainly in the Taranaki region; this was simply a packaging error and no actual muled coins are known.

Due to regional travel and the fact that many other former British colonies around the world use coinage systems with British-derived origins of sizing and weight, many Fijian, Samoan, Singaporean, South African, and especially Australian coins had been in daily circulation in New Zealand despite not being official legal tender. It is of note that the United Kingdom itself does not use these sizes of coins any more, and there has been the odd case of foreign coins appearing in a customer's change. The consistently similar but not significantly higher value of the Australian currency and the obverse side of Australian coins being almost the same as New Zealand coins also didn't discourage this practice, with millions of 5, 10, and 20 cent Australian coins having been used in New Zealand in an identical manner to their true counterparts.[citation needed] These coins could circulate for long periods without being recognised. The coinage size and material changeover (see 'change for the better' section above) of 31 July to 31 October 2006 means these foreign coins can no longer be accepted interchangeably, though the new 10 cent coin strongly resembles the British one penny coin in size, weight and appearance and the unchanged one dollar coin remains very similar to the Fijian counterpart. There is also occasional confusion between the New Zealand one dollar coin and the Australian two dollar coin, and similarly between the New Zealand two dollar coin and Australian one dollar coin, on account of the coins' similar sizes and weights.